The Muamalat Newsletter Vol. 2 2024
FEM eNewsletter | December 2024 74 Carbon measures and traditional financial indicators are often hard for organisations to match, which leads to inconsistent reporting methods (Knox et al., 2020). This lack of communication can make it harder to make smart decisions and use sustainability efforts to gain a competitive edge. Some problems with carbon accounting are bad data, lots of different sources of emissions, no standardisation, changing patterns of emissions, and not being able to connect to financial reports. These issues need to be fixed if companies want to improve their carbon accounting methods and make a real difference in meeting global climate goals. What Will Happen With Carbon Accounting In The Future? Carbon accounting is becoming increasingly important toabusiness’s successas theneed to cut emissions and meet lofty decarbonisation goals grows. Carbon prices are steadily increasing along with climate promises and rules, giving the business sector more reason to track, measure, and cut carbon emissions. Carbon accounting gives companies the tools to count and measure their carbon emissions, which helps them make smart choices about reducing their carbon footprint. Companies can use carbon tracking to find out where they are putting out the most pollution. In this way, they can decide which decarbonization strategies will have the most effect. Carbon accounting and Environmental, Social, and Governance (ESG) reports are about to go through big changes in the future. As people around the world become more aware of climate change, rules are likely to get stricter, forcing businesses to use more rigorous and consistent carbon tracking methods. New technologies like blockchain and AI will make it easier to collect and verify data, which will help businesses keep track of their pollution and make clear reports. Additionally, as investors put more emphasis on sustainability, businesses that want to attract capital and keep their competitive edge will need to include carbon accounting in larger ESG frameworks. This change will not only make things more open and accountable, but it will also encourage new sustainable practices, which will lead to better climate action overall. Carbon accounting and ESG efforts working together will be very important for creating a sustainable future, encouraging people to be responsible and take an active role in caring for the environment. References Bringer, D. W., et al. (2021). “Challenges in Carbon Accounting: Data Quality and Availability.” Environmental Science & Policy, 115, 80-89. Cordova, C., Zorio-Grima, A., & Merello, P. (2021). Contextual and corporate governance effects on carbon accounting and carbon performance in emerging economies. Corporate Governance: The International Journal of Business in Society, 21(3), 536-550. Di Vaio, A., Zaffar, A., Chhabra, M., & Balsalobre‐Lorente, D. (2024). Carbon accounting and integrated reporting for net‐ zero business models towards sustainable development: a systematic literature review. Business Strategy and the Environment. Garveya, G. T., Iyera, M., & Nashb, J. (2018). Carbon footprint and productivity: Does the “E” in ESG capture efficiency as well as environment. J. Invest. Manag, 16, 59-69. Haller, K. M., et al. (2020). “Understanding the Complexities of Carbon Accounting: Emission Scope Challenges.” Journal of Cleaner Production, 260, 121-129. Jenkins, A. P. M., et al. (2019). “The Need for Standardization in Carbon Accounting.” Global Environmental Change, 55, 84-95. Jiang, Y., & Tang, Q. (2023). Mandatory carbon reporting, voluntary carbon disclosure and ESG performance. Pacific Accounting Review, 35(4), 534-561. Knox, S. M. H., et al. (2020). “Integrating Carbon Accounting with Financial Reporting.” Accounting, Organizations and Society, 81, 101104.
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